Question

In: Operations Management

I have a project planned to be completed in 6 months with a budget of 60,000....

I have a project planned to be completed in 6 months with a budget of 60,000. after three months 30,000 spends which is 50% of the budget is spend.

Use earned value management to calculate:

A) cost performance index (CPI)

B)Schedule performance index (SPI)

C)estimate at completion (EAC).

Solutions

Expert Solution

As per the case scenario:

Planned timeline of project= 6months

Planned budget for 6months =$60,000

Earned Value is the task amount actually completed.

So, after 3 months,50% is completed then EV= percentage complete (Actual)* Task budget

= 60,000*50%= 60,000/2= $30,000

Planned value is the task amount supposed to be completed

So, after 3months 50% is completed then PV= Percentage complete (Planned)*Task budget

= 60,000*50%= 60,000/2= $30,000

Actual cost is the actual today cost of the task (AC)= $30,000 is spent after 3months

SPI (Schedule performance index) =EV/PV= 30,000/30,000= 1

If SPI =1 the task is on schedule

CPI (Cost performance index) = EV/AC= 30,000/30,000 =1

If CPI= 1 the task is on budget

EAC (Estimate at completion)= Budget at completion (BAC)/CPI

Budget at completion is $60,000

= 60,000/1= $60,000

So, as per the above analysis, the project schedule is on time and on budget with no extra costs added to finish the project.


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